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The two goods are equally priced at Rs 10 and the consumer’s income is Rs 40. (Q1) A consumer wants to maximise his satisfaction from commodities X and Y but a rupee worth of marginal utility is not same for commodities. This is because of monotonic preferences, as monotonic preferences state that we must have atleast more of one good and no less that of other goods (means other goods can be equal or greater, but not less). The figure above shows that bundle F(OX2 + OY2) is monotonic preferred to bundle E(OX1 + OY1). For, e.g., point E lying on IC, represents OX, units of X and OY1 units of Y.

According to the IC analysis, a buyer maximises his utility by selecting a package of two commodities that is also within his budget. This will be used to calculate a commodity’s demand curve. In the diagram, where the IC curve is tangent to the budget line, that is point E is the optimal choice, and also a point of consumer equilibrium.

1.Consumer The one who takes decisions about what to buy for the satisfaction of wants, both as an individual or as a member of a household, is called a consumer. Doubtnut helps with homework, doubts and solutions to all the questions. It has helped students get under AIR 100 in NEET & IIT JEE. Get solutions for NEET and IIT JEE previous years papers, along with chapter wise NEET MCQ solutions.

Fill in the Blank with Appropriate Alternatives Given Below: When Mu is ______________ Tu Decreases. – Economics

• In relationship between Total Utility & Marginal Utility, MU (Marginal Utility) of a commodity becomes negative when TU (Total Utility) of a commodity is ______.
• As utils vary from individual to individual, it cannot be taken as a standard unit for measurement.
• Understanding the concepts of Total Utility (TU) and Marginal Utility (MU) is crucial to grasp consumer behavior and decision-making processes.
• 1.Consumer The one who takes decisions about what to buy for the satisfaction of wants, both as an individual or as a member of a household, is called a consumer.
• (Q5) Price of coffee rises, while price of tea remains constant.

Point F lying on IC2 represents more units of Y, i.e., OY, as well as more units of X, i.e. OX2.The consumer gets greater satisfaction from a larger pieces of goods than from a smaller when mu is falling tu is amount. Hence, point F shall be on a higher IC and shall be more preferable to point E, lying on lower IC.

• It is possible that there can be a parallel shift in the budget line.
• Maximum Maharashtra State Board Economics English 12 Standard HSC students prefer Balbharati Textbook Solutions to score more in exams.
• Additional utility derived by a consumer from an additional unit consumed.
• Answer the following question.Discuss briefly, using a hypothetical schedule, the relation between marginal utility and total utility.
• It is also called fundamental law of satisfaction
• We have also provided detailed explanations for all difficult topics in Chapter 5 Consumer Equilibrium Class 12 chapter of Economics so that it can be easier for students to understand all answers.

Maharashtra State Board 12th Economics Important Questions Chapter 2 Utility Analysis

It can be seen from the above schedule that total utility increases at a diminishing rate, which leads to fall in marginal utility. Question 4.After a point of satiety, any additional consumption of commodity results into –(a) negative MU(b) diminishing TU(c) disutility(d) maximum TU Aggregate of utility derived by the consumer from all units of a commodity consumed − As the table illustrates, as the quantity consumed increases, total utility initially rises rapidly, but then at a decreasing rate. Marginal utility, on the other hand, declines steadily, eventually becoming negative.

Chapters

The prices of the two goods are Rs 4 and Rs 5 respectively. (Q10) If a person gets satisfaction of 100 utils from consumption of 10 apples, what is this term called ? If he takes 11 apples then he gets satisfaction equal to 10 utils, what is this term called?

Chapter 1: Introduction

The effects of price changes on the amount desired of an item are described in the form of a law known as the law of demand. The quantity that a consumer is able and willing to purchase at a specific price and within a specific time frame. The budget line’s slope indicates how much change in good 2 is necessary per unit of change in good 1 along the budget line. The budget constraint includes all the different combinations of goods or products that a person can afford based on the cost of goods and consumer income.

These NCERT Solutions with answers for Class 12 Economics will come in exams and help you to score good marks Question 5.Want satisfying power of a commodity is called –(a) usefulness(b) satisfaction(c) happiness(d) utility Which feature of utility explains why woollen clothes are more valued in winter compared to summer? Which statement best explains the “subjective” nature of utility in economics? Additional utility derived by a consumer from an additional unit consumed. When total utility is maximum, marginal utility is zero.

It explains by how much the quantity demanded will change in response to a price change. Why is a consumer’s equilibrium achieved where the budget line is tangent to an indifference curve? A movement along the demand curve occurs due to a change in the commodity’s own price, leading to an ‘expansion’ or ‘contraction’ of demand. A budget set includes all possible combinations (bundles) of two goods that a consumer can afford with their given income at prevailing market prices.

(c) A consumer is said to be in equilibrium when he has allocated his available money income among different uses in such a way that he gets maximum marginal utility for each use. (Q1) “Law of diminishing marginal utility will operate even if consumption takes place in   intervals”. At a certain consumptionlevel of these goods, he finds that the ratio of marginal utility to price in case of X is lower than that in case of Y. OrBy spending his entire income only on two goods X and Y a consumer finds that, MUz/Pz y/PyExplain how will the consumed react.

Utility Analysis : Total Utility and Marginal Utility

Thus, four utils are more significant than three utils, three utils are more significant than two utils, and so on. Explain any four exceptions of the law of Diminishing marginal utility. Giving reasons, state why the following two conditions must be satisfied when a consumer is in equilibrium.

The budget line graphically represents the bundles that cost exactly equal to the consumer’s entire income. It is a negatively sloped line, and its slope is determined by the ratio of the prices of the two goods (-Px/Py). It is possible that there can be a parallel shift in the budget line. The change happens because of the change in the consumer’s income and a change in the goods’ prices.

MU is the change in TU caused by the consumption of one extra unit. MU can also be calculated when the change in units consumed is more than one. According to classical economics, utility can be measured similarly to how one would measure one’s height or weight.

The same product can provide various levels of utility to different people. A consumer’s desire for an item is usually determined by the utility (or satisfaction) he obtains from it. What happens to marginal utility as more units of a good are consumed? Answer the following question.Discuss briefly, using a hypothetical schedule, the relation between marginal utility and total utility.

(Q8) When onion price hits hard, the poor man simply avoids buying it. Explain the Economics of it using utility analysis. (Q5) If MU of rupees increases, the quantity demanded of the commodity will also increase. (Q3) Unless MUM is assumed to be constant, equilibrium of the consumer cannot be specified.

Marginal utility increases with increase in consumption. Explain the relationship between ‘total utility’ and ‘marginal utility’. Shaalaa.com has the Maharashtra State Board Mathematics Economics English 12 Standard HSC Maharashtra State Board solutions in a manner that help students grasp basic concepts better and faster.

When two things are consumed concurrently, satisfaction can be compared at best. Due to this drawback, utility analysis is shown to have minimal application in describing consumer equilibrium. TU increases with an increase in the consumption of a commodity and as long as MU is positive. Till 4 burgers, TU increases at a diminishing rate as MU from each successive burger diminishes. Marginal Utility is the utility obtained from the last unit of a product or service. It refers to the additional utility on account of the consumption of an additional unit of a commodity.